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Interview: Energy Investor Bill Powers Discusses Looming Shale Gas Bubble

1:43 pm in Uncategorized by Steve Horn

Cross-Posted from DeSmogBlog

Cold Hungry and in the Dark cover

Bill Powers latest book looks at the mythology of the natural gas industry.

On Sat., April 27, I met up with energy investor Bill Powers at Prairie Moon Restaurant in Evanston, IL for a mid-afternoon lunch to discuss his forthcoming book set to hit bookstores on June 18.

The book’s title – Cold, Hungry and in the Dark: Exploding the Natural Gas Supply Myth - pokes fun at the statement made by former Chesapeake Energy CEO Aubrey McClendon at the 2011 Shale Gas Insight conference in Philadelphia, PA.

“What a glorious vision of the future: It’s cold, it’s dark and we’re all hungry,” Powers said in response to the fact that there were activists outside of the city’s convention center. ”I have no interest in turning the clock back to the dark ages like our opponents do.”

What Powers unpacks in his book, though, is that McClendon and his fellow “shale promoters,” as he puts it in his book, aren’t quite as “visionary” as they would lead us all to believe.

Indeed, the well production data that Powers picked through on a state-by-state basis demonstrates a “drilling treadmill.” That means each time an area is fracked, after the frackers find the “sweet spot,” that area yields diminishing returns on gas production on a monthly and annual basis.

It’s an argument regular readers of DeSmogBlog are familiar with because of our recent coverage of the Post Carbon Institute‘s “Drill Baby, Drill” report by J. David Hughes.

Powers posits this could lead to a domestic gas crisis akin to the one faced in the 1970′s.

We discuss these issues and far more in the interview below.

SH: Tell me more about the premise of your book, why you wrote it, and what you think some of the biggest findings were from your book.

BP: What I really take a look at and show is that shale gas, while it’s an important resource, it’s importance has been vastly over-stated. We do not have a 100-year supply of shale gas.

The increasing demand, which has been brought about by the low prices of the last few years, is going to lead to another 1970’s-style gas crisis. That will happen sometime between 2013 and 2015. We are seeing gas – while there’s been a lot of promotion of the 100-year supply myth – the facts simply just do not support it. That’s the premise of the book.

SH: Why and how is gas such an important resource in the US to begin with that a crisis akin to that which happened in the 1970′s could happen here again?

BP: Well, the US produces over 60 billion cubic feet per day, which is the energy equivalent of 10 million barrels of oil per day.

We’ve already seen a major move away from coal-fired power plants towards increased reliance on gas, we’re seeing legislation come in such as MATS that would be implemented by 2015 and would shut down many coal-fired power plants. We’re seeing increased consumption not just from the electrical power industry but also from the industrial sector. We’re seeing a big fertilizer plant being built in Iowa right now that will consume huge amounts of natural gas. We’re seeing a pick-up of natural gas consumption in manufacturing after more than a decade of decline, and we’ve seen an increasing number of homes in the U.S. that are heated by natural gas.

SH: Increasingly so because of the increase in gas power plants and the switch-over, right?

BP: We’ve seen more homes in the Northeast switch away from heating oil to gas and we’ve seen many homes for decades in the Midwest heated with gas, so that is something that I think is going to have a very big impact on the rise of gas prices and a very big impact on a lot of Americans. That’s going to lead to higher electricity prices, higher home heating costs, as well as higher food costs, because the natural gas component of fertilizer is so significant.

SH: Do you think that there will be a switch back to coal then because of the gas crisis? Or is it a broader problem than just a simple switch-over?

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Fracking Making Its Way Toward the UK

1:39 pm in Uncategorized by Steve Horn

To frack or not to frack

Cross-Posted from DeSmogBlog

To date, opposition to hydraulic fracturing (“fracking”) for unconventional oil and gas in the United Kingdom (UK) has been fierce. The opposition, though, seems to be meeting deaf ears in England, according to recent news reports.

Bloomberg reported on Dec. 4 that England’s Energy Secretary, Ed Davey, wants to lift the country’s currently existing moratorium on fracking. The halt was put in place after drilling sites owned by Cuadrilla Resources caused two minor earthquakes in northwestern England in November 2011.

England’s Chancellor of the Exchequer (a position equivalent to the Secretary of the Treasury in the United States), George Osborne, is set to release Britain’s new energy plan on Dec. 5 and told Bloomberg he wants to ensure “Britain is not left behind” in the unconventional oil and gas boom.

“Cuadrilla estimates that the area it is exploring in Lancashire, in northwestern England, could contain 200 trillion cubic feet of gas—more gas than all of Iraq,” explained Bloomberg. John Browne, the scandal-ridden former CEO of BP, sits as the Chairman of the Board of Directors of Cuadrilla.

Osborne, The Independent recently reported, will also offer tax breaks to oil and gas corporations hungry to profit from England’s shale gas prize.

“Mr. Osborne hopes that tax breaks for shale gas extraction will encourage investors and help economic growth,” The Indepedent wrote. ”Oil and gas are currently taxed at between 62 per cent and 81 per cent. Shale gas would be taxed at lower rates.”

An astounding 64-percent of the English countryside could soon be subject to fracking, which is over 34,000 square miles, according to The Independent.

Fracking in Ireland on Hold For Now

England’s neighbor to the west, Ireland, also sits on massive reserves of unconventional oil and gas yet to be tapped.

A recent independent assessment, according to The Financial Times, estimates Ireland’s stockpile of shale gas at up to 13 trillion cubic feet of technically recoverable gas. The Marcellus Shale, by comparison, which sits predominantly in Pennsylvania and New York, has 84 TCF of shale gas according to the most recent estimates by the United States Geological Survey (USGS).

Estimates of technically recoverable shale gas have proven controversial in the United States, though, with critics such as Bill Powers, Art Berman, Deborah Rogers, and Food and Water Watch all saying actual production rates have proven far lower than the estimations on what’s technically feasible. This ongoing trend, these critics say, portends the bursting of the “shale gas bubble” akin to the bursting of the “housing bubble” in 2008.

Ireland’s Environmental Protection Agency is set to publish a report on the potential ecological risks of fracking in the country by 2014 and until then, the Irish ban on fracking will remain in place.

The question still remains: Is there as much gas under the ground in The Emerald Isle as the industry currently boasts of? The answer: Not likely.

Image by SS&SS under Creative Commons license.

Shale Gas Bubble About to Burst: Art Berman, Bill Powers

4:55 pm in Uncategorized by Steve Horn

Cross-Posted from DeSmogBlog

Food and Water Watch recently demonstrated that the dominant narrative, “100 years” of unconventional oil and gas in the United States, is false. At most, some 50 years of this dirty energy resource may exist beneath our feet.

Bill Powers, editor of Powers Energy Investor, has a new book set for publication in May 2013 titled, “Cold, Hungry and in the Dark: Exploding the Natural Gas Supply Myth.”

Powers’ book will reveal that production rates in all of the shale basins are far lower than the oil and gas industry is claiming and are actually in alarmingly steep decline. In short, the “shale gas bubble” is about to burst.

In a recent interview, Powers said the “bubble” will end up looking a lot like the housing bubble that burst in 2008-2009, and that U.S. shale gas will last no longer than ten years. He told The Energy Report:

My thesis is that the importance of shale gas has been grossly overstated; the U.S. has nowhere close to a 100-year supply. This myth has been perpetuated by self-interested industry, media and politicians…In the book, I take a very hard look at the facts. And I conclude that the U.S. has between a five- to seven-year supply of shale gas, and not 100 years.

The hotly-anticipated book may explain why shale gas industry giants like Chesapeake Energy have behaved more like real estate companies, making more money flipping over land leases than they do producing actual gas.

Powers told The Energy Report:

Put simply: There is production decline in the Haynesville and Barnett shales. Output is declining in the Woodford Shale in Oklahoma. Some of the older shale plays, such as the Fayetteville Shale, are starting to roll over. As these shale plays reverse direction and the Marcellus Shale slows down its production growth, overall U.S. production will fall.

Powers believes we are quickly approaching a gas crisis akin to what occured in the 1970′s and because of that, prices will soon skyrocket.

Art Berman Also Sounds the “Shale Gas Bubble” Alarm

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